Ignore Car Insurance Marketing Pitches

by Kevin on March 4, 2009

In the past, during good economic times, you would hear car insurance commercials that pitched the benefit of having a personal relationship with your insurance agent. State Farm used this heavily. Essentially they were admitting you might pay a couple of bucks more for that benefit, but because of the agent it was well worth it.

Now with the economy in a massive slump and a lot of people standing in unemployment lines their tunes seemed to have changed. They want to focus more on how much money you can save by switching to them over one of their competitors.

You hear things like “On average, new customers saved $305 per year by switching to…”

At the end of the day both of these styles — pitching the agent and pitching the lower cost — are marketing ploys. And you should ignore both of them.

Why You Should Ignore the Car Insurance Pitch

Claiming that having an agent is a huge benefit doesn’t fly these days. But even if we were in good economic times you should still ignore it. Sure having someone who knows your family inside and out and can provide the right products for you is great. Yet having an agent is like having a constant companion from the company, always ready to sell you that next product. As the agent develops a rapport with you they can then start to ask questions like, “Have you thought about getting an annuity to protect your income?” We won’t go into the depths of annuities here today, but let me just say that generally they are extremely expensive products for you to own.

That’s the idea. Develop the relationship, then sell more products whether it be additional riders on your insurance policy (car rental coverage, increased coverage amounts) or separate products the company sells (annuities and investment accounts).

The Switching and Saving Ploy

I’ve got to give credit to one of my close friends for this reminder. We went on a trip this weekend and this somehow popped into the conversation.

You’ve seen the commercials from State Farm and Allstate about how drivers that switched to their company saved a lot of money. End of story. They want you to think that everyone who switches saves money. Because they do save money.

But here’s the kicker. Everyone who switches insurance companies and takes their business from one firm to the next… well …they switched because they saved money.

There’s a small difference there. Those customers that switched firms switched because they saved money by doing so. The customers that wouldn’t save money by switching most likely did not switch. It isn’t that every person that called the firm to inquire about a new policy was told they would save money, but that’s what they want you to think. Instead it is just that people who would save money are a lot more likely to switch than those that wouldn’t save money (or it would cost them money).

It’s a very subtle difference that the insurance firms don’t want you to pick up on. In reality they just want more people calling more agents in an effort to drum up more business. And that’s fine. I recommend you shop around for car insurance. There is little need for company loyalty these days especially if it can save you hundreds of dollars per year (which you should then give a name and save properly). Personally speaking I saved $400+ each year when I switched from Allstate to Geico after we got married. But that’s just me and you might not save money.

Anyone out there switched companies recently? How much did you save? Leave a comment and get the discussion rolling.

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